Product Mix Decisions

Some companies may offer, not one, but several lines of products which form a product mix or product assortment. For example, a cosmetics firm may have four main product lines in its product mix: cosmetics, jewellery, fashions and household items. Each product line may consist of a range of items or sublines. Take cosmetics. This could be broken down into several sublines - lipstick, powder, nail varnish, eye-shadows and so on. Each subline may have many individual items. For example, eye-shadows contain a string of items, ranging from different colours to alternative application modes (e.g. pencil, roll-on, powder).

The width of the product mix refers to the number of different product lines the company carries - 6 in the case of Procter & Gamble. (In fact, P & G produces many more lines, including mouthwashes, paper towels, disposable nappies, pain relievers and cosmetics.)

product mix (product assortment) The ser of all product linen and items that a particular seller offers for sale Cij buyers.

The length of P & G's product mix refers to the total number of items the company carries, which is 42. We can also compute the average length of a line at P & G by dividing the tota! length (here, 42) by the number of lines (here, 6). So, the average P & G product line consists of 7 brands.

The depth or number of versions offered of each brand or product in the line can also be counted. Thus, if Crest comes in three sizes and two formulations (paste and gel), Crest has a depth of 6.

The consistency of the product mix refers to how closely related the various product lines are in end use. production requirements, distribution channels or some other way. P & G's product lines are consistent insofar as they are consumer goods that go through the same distribution channels. The lines are less consistent insofar as they perform different functions for buyers.

These product-mix dimensions provide the handles for defining the company's product Strategy. The company can increase its business in four ways;

1. It can add new product lines, thus widening its product mix. In this way, its new lines build on the company's reputation in its other lines.

2. The company can lengthen its existing product lines to become a more full-line company.

3. It can add more product versions of each product and thus deepen its product mix.

4. The company can pursue more product line consistency, or less, depending on whether it wants to have a strong reputation in a single field or in several fields.

International Product Decisions

We now turn to some of the key issues that marketers consider in making international product decisions. International marketers face special product and packaging challenges. As discussed in Chapter 5, they must decide what products to introduce in which countries, and how much of the product to standardize or adapt for world markets. Companies must usually respond to national differences by adapting their product offerings. Something as simple as an electrioal outlet can create big product problems:

Those who have travelled to Europe know the frustration of electrical plugs, different voltages, and other annoyances of international travel. ... Philips, the electrical appliance manufacturer, has to produce 12 kinds of irons to serve just its European market. The problem is that Europe still lacks a universal [electrical] standard. The ends of irons bristle with different plugs for different countries. Some have three prongs, others two; prongs protrude straight or angled, round or rectangular, fat, thin, and sometimes sheathed. There are circular plug faces, squares, pentagons, and hexagons. Some are perforated and some are notched. One French plug has a niche like a keyhole; British plugs carry fuses,26

Packaging also presents new challenges for international marketers. Packaging issues can be subtle. For example, names, labels and colours may not translate easily from one country to another. Consumers in different countries also vary in their packaging preferences. Europeans like efficient, functional, recyclable boxes with understated designs. In contrast, the Japanese often use packages as gifts. Thus in Japan, Lever Brothers packages its Lux soap in stylish gift boxes. Packaging may even have to be tailored to meet the physical characteristics of consumers in various parts of the world. For instance, soft drinks are sold in smaller eans in Japan to fit the smaller Japanese hand better.

Companies may have to adapt their packaging to meet specific regulations regarding package design or label contents. For instance, some countries ban the use of any foreign language on labels; other countries require that labels be printed in two or more languages. Labelling laws vary greatly from country to country. The international firm would do well to study these and modify its product packaging and labels to conform with local requirements.

In summary, whether domestic or international, product strategy calls for complex decisions on product mix, product line, branding, packaging and service strategy. These decisions must be made not only with a full understanding of consumer wants and competitors' strategies, but also with considerable sensitivity to the regulatory environment affecting both product and packaging.

Summary

The concept of a product is complex and includes three levels: the core product, the actual product and the augmented product. Marketers must develop a produet strategy that calls for co-ordinated decisions on product items, product lines and the product mix.

The core product is the essential benefit that the customer is really buying. The actual product includes the features, styling, quality, brand name and packaging of the product offered for sale. The augmented product is the actual product plus the various services offered with it, such as warranty, installation, maintenance and free delivery.

There are three basic types oi'product classification. Durable goods are used over an extended period of time. Non-durable goods are consumed more quickly, usually in a single use or on a few usage occasions. Services are activities or benefits offered for sale which are basically intangible and do not result in ownership of anything. Each of these products can be bought by either consumer or industrial customers. Consumer goods are sold to the final end-user for personal consumption. Industrial goods are bought by individuals or organizations as goods that will receive further processing, or for use in conducting a business.

Marketers make individual product decisions for each product, including product attribute decisions, brand, packaging, labelling and product-support services decisions. Product attributes deliver benefits through tangible aspects of the product, including quality, features and design. A brand is a way to identify and differentiate goods or services through use of a name or distinctive design element, resulting in long-term value known as brand equity. Branding poses challenging decisions to the marketer, ranging from deciding whether to brand or not, selecting a brand name and deciding the brand sponsor to determining the brand strategy and brand repositioning opportunities. The product package and labelling are also important elements In the product decision mix, as they both carry brand equity through appearance and affect product performance with functionality.

The level of product-support services provided can also have a major effect on the appeal of the product to a potential purchaser. They add value for customers and are effective weapons against competitors. The company must determine the most important services to offer and the best ways to deliver them. The service mix should be co-ordinated by a customer service department that handles complaints and adjustments, credit, maintenance, technical service and customer information. Customer service should be used as a marketing tool to create customer satisfaction and competitive advantage.

Product strategy goes a step beyond individual product decisions, requiring that offerings be built into a logical portfolio through product line decisions, A product line is a group of products that are closely related because of similar function, customers, channels of distribution or pricing. A key dimension of the product line is the number of items it contains, referred to as the product line length. Profits are optimal when the line is of proper length. The product line length can be increased by stretching upwards to a higher-priced segment, or by stretching both ways. Profits can sometimes be increased by product line filling, adding more items within the present range of the line. Managers also keep their products current through product line modernization.

Organizations manage multiple product lines through product-mix decisions, A company's product mix has four basic dimensions: width, length, depth and consistency. The width of a product mix refers to the number of different types of product line that a company offers. Product-mix length is the total number of items that the company carries. Depth pertains to the number of versions, such as colours or flavours, offered for each product in a line. (Consistency is a measure of how closely related different product lines arc to one another. Consistency can be judged based on end use, channels of distribution or production methods.

Marketers face complex considerations In international product decisions including: a decision about what products to introduce in what countries; whether to standardize the product and packaging; and whether to adapt it to local conditions.

Overall, developing products and brands is a complex and demanding task. There are no firm rules chat can assure success in these decisions. Market-oriented firms use die product as a means of creating a differential advantage. A sound product strategy always takes customers' needs and wants into consideration. For long-term success, marketing decision makers must evaluate the many issues in making product decisions and maintain consistency with broad company objectives.

You already recognize that rich individuals think differently than middle class or poor individuals in every aspect of life. But particularly when it comes to money. That's why they're rich. Their selections and decisions just by nature bring about riches.